Skip to main content

tv   Mad Money  CNBC  October 22, 2013 11:00pm-12:01am EDT

11:00 pm
>> my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now. hey, i'm cramer! welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you a little money. my job is not just to entertain you, but to teach and coach you, so call me at 1-800-743-cnbc.
11:01 pm
suddenly interest rates are a force determining stock prices. this time, it's not bearish, it's bullish! a positive force, chief reason the dow rallied. we're back into bad news is good news mode here, and the bad news is that unemployment, well, employment is weak. employment is getting weaker, which will send interest rates back to levels that encourage all sorts of economic activity here. while at the same time driving the dollar lower to a level that benefits our big international exporters. meanwhile, inflation is coming down because of all of our newfound oil, making gasoline cheaper. wow. halcyon. lower interest rates, lower dollar, lower gasoline, this is the stuff of greatness for the stock market. let me show you why. first, we have lost entirely the bond market equivalent stocks. the stocks that did well because of the dividends when interest rates were low. now rates are in retreat and those stocks are roaring again. take kimberly clark. the company reported a spectacular number. thank you for coming on the show. hope to see you soon.
11:02 pm
and the dividend yield had gotten so outsized that the stock was ready to rocket, so it did, finishing up four points. that brought along kellogg, clorox, general mills, these were three other stocks that had languished. all three had been downgraded over the last week. you know what i think about those downgrades? >> boo! >> those downgrades, they look pretty darn stupid, because these stocks are all about ways to get yield without losing any sleep at night. no matter how many times they were downgraded, they wouldn't come in. kimberly reported 5% organic growth and extraordinary acceleration. i was looking for about 3%. any sign the economy is slowing brings money to the other, like colgate and hershey. and fears that we are suddenly going to slip back into a recession because washington is very tight with its money, and given the next employment number, we will be worse, because of the turmoil in washington that has eroded the confidence where you need to start a business. pepsico, the standout snack and
11:03 pm
beverage company finally got confident for its excellent quarter, rallying, up a buck seven. and j&j lasted better too after his last drug report. my charitable trust proudly owns it. washington is like a tax leisure in my mind. here's what washington says. it says, you just don't know if you're going to have a 2,000-point decline or a stock market or our country is going to slip back into great recession mode because of the hatred of the three parties, the democrats, the republican, and the tea. with the latter still very much in ascendance, i think the latter is unstoppable. i think they're even stronger. and you know what will happen when you don't know -- when you have that kind of uncertainty, a three-party uncertainty, i'll tell you, someone who's started six businesses, you don't create another. it is washington's fault, we all know it. i heard some people not blame washington today. i just tuned them out and thought more about my fantasy league where i'm five and two.
11:04 pm
the second joy of lower interest rates. not that long ago, we thought mortgage rates which had gone from 3.5% to 4.7% were headed inexorably to 5%. at the same time where housing prices have flown up. the home builders have been saying, don't worry about it. but if they tell you to worry, they don't sell houses. i get their concern. now, the mortgage rates are dropping more toward 4% and home prices have started to stall out and come back a bit. it's as if ben bernanke, remember the critics of him, it's like ben bernanke totally got his way. and you can see it when housing-related companies report good numbers. after the disaster with stanley and black and decker, people sold down all the housing-related plays. but today whirlpool reported a magnificent number and it raised expectations, which caused the stock to rally 15 bucks. this is not a biotech company, 15 bucks, mostly on the backs of short sellers betting it was indeed the next black and decker. wrong. it lit a fire under toll
11:05 pm
brothers and pulte. lower oil prices have led to renewed interest in travel and leisure. lower gasoline prices are fabulous news for disney, for its theme parks. that stock is recovering from the silly decline after last quarter. i have to be abject and slam those people upside the head who didn't like the disney quarter, like i did about the people who said negative things about whole foods. chipotle keeps climbing. i told you to be careful of panera. that was correct. lower gas prices also helped starbucks, which shot up to an all-time high today, despite the fact that we hear all these negative stories about china. don't forget, we're going to sit down with ceo howard schultz tomorrow and talk about how business is doing. lower energy costs, also go to the bottom line of the transports, including the airlines and freight companies. and delta reported its best quarter ever and was able to raise prices nicely without resistance. did you hear me? an airline company able to raise prices without resistance? fedex won't quit. it's up another couple of bucks again. retailers have been down in the
11:06 pm
dumps, quarter, nice bid, walmart, target, and tjx performing extraordinarily well. is tjx not the unsung hero of this market? international companies can start benefiting in the currency translations. you know i thought the decline in honeywell was fatuous yesterday. said the same last night. and today the company boosted its dividend by 10%, which was sharply more than i expected, showing me that the sell-off was nothing more than stupid money exiting stupidly. now, just consider that honeywell is a huge international play that will benefit from the weak dollar. the biggest beneficiaries, the oil companies, are due to report, and i'm expecting big things from ford and general motors, which have become cheap. and yes, i am sticking my neck out on ford. i am saying i think it's going
11:07 pm
to be real good. so get out the guillotine if i get that one wrong. darn it. there it is. i just put it right like that. and while i know it's not very cyclical, mcdonald's is a giant beneficiary of a weaker dollar. do you know that the stock can -- all that hand wringing, stock's barely down. that means the international market is going to get better or the translation will get better. the metals, perhaps on international demand that could come from stronger currencies overseas, also played a huge part today. freeport-mcmoran put together a very strong quarter. and let's get to this, let's say it. i want to go on record right here, right now. alcoa is starting to get jiggy! keep track of the latter, as i think it's about to make its long-awaited move into teenager status. there's too much good happening in alcoa for it to be kept down much longer. i intend to start banging the drum loudly and quickly for this one. not every company did well today. the big momentum stocks have been defying gravity, they came crashing down. netflix reversed after a huge morning run. tesla couldn't rally. what is that about?
11:08 pm
it needs another endorsement from someone. linkedin and yelp were treated as the profit taking. the banks started to dissipate. always tough when you don't know which government agency will take a shot at you any day. and the oils were really clobbered. pioneer natural enduring the worst of the pain, falling $1.79. i've been waiting for the weakness caused by fears that oil could be in for a big drop and we saw that today. these stocks are taking well-deserved breathers. nothing more. how long can all this good news come on? the jobs number was so weak and the next numbers are even worse means that we may be in for more interest rate declines. perhaps well under 2.5%. as long as rates stay stable or go lower, the backdrop could be considered benign enough to allow us to flourish until the next washington food fight. who knows, though? maybe this number shows the tea party politicians who despise this current administration, that perhaps even the people in their redistricted areas, who cling to their right to express themselves any way they want, hallelujah, actually may care about not being thrown out of
11:09 pm
work. that could be something that brings us together. here's the bottom line. there was enough good stemming from this employment number, lower rates, lower oil prices, and a lower dollar, that we bought some more rally. interest rate declines are never a bad thing, and the longer they go on, the more these winners keep powering higher, reminding you that when washington's away, the bulls, indeed, do play! john in california, john?! >> caller: jim, love your show. >> thank you, john! thank you very much! >> caller: i have a west coast beach point baa baa baa b-b-b- boo-yah for you! >> i kind of like that boo-yah. that works for me. i don't know if it works for everybody in the room. >> caller: i have a question. i've had btu peabody energy for a while. i bought it at 25 and took it down, but then i jumped on it at 12, playing the game, and now it's coming back nicely. i just wonder, do i get the -- does it have legs to get back? >> well, you were playing a new game, a la van the man and brown-eyed girl.
11:10 pm
and you know what, it worked. you know, going down the old mine, the old freeport mine -- the old btu mine with a transistor radio. btu is doing better than i thought. my portfolio trust has been in joy. we don't see a lot of joy in joyville, but i'll tell you, you're doing the momentum there, but please don't get greedy. freeport makes me feel a little bit better about the group, though. let's go to leo in louisiana. leo?! >> caller: big baton rouge boo-yah, jim! >> bengal boo-yah! >> caller: lsu fighting tigers. next time you see your daughter, come back, we'll let you quarterback. i called you and asked you about delta airline. it was 920 a share. now it's 25 -- >> delta's not going up. this is the age of airlines. they're able to raise price. oligopolistic pricing is the best thing that can happen to a company, even if it's not best for the rest of us.
11:11 pm
lower interest rates, lower dollar, lower gasoline, they all make for a higher market. "mad money" will be right back. coming up, how high? the market continues to hit new high after new high, but is the run done or just getting started? cramer's turning to the technicals to reveal patterns that could prove profitable. and later, search and destroy? google crossed over the $1,000 mark, but is this only the beginning of a march towards digital dominance? cramer's searching to find out if even more impressive results are yet to come. plus, job number one? could the key to fixing america's unemployment picture be in our own backyard? oil-rich bakken shale helped bring north dakota's joblessness to half the national average. and emerald oil has been drilling right in the heart of the play. don't miss cramer's exclusive. all coming up on "mad money."
11:12 pm
11:13 pm
11:14 pm
11:15 pm
on a day when the volatility index, you know it at the vix, also known as the fear gauge, increased 1.29%, what should we take away from this move? you hear a lot about the vix these days, yet there still seems to be a fundamental misunderstanding of how it works. we'll clear that up tonight. you'll see people quoting the volatility index as an indicator all of its own. that doesn't work. without context, the vix alone actually tells you very little. reporting that the vix is higher on a day when the averages are down, that's kind of like saying the bear fans were angry because the bears lost sunday. it doesn't tell you anything you didn't know, other than the fact that maybe you can't play cutler for a couple of weeks. as you might imagine, there's a powerful correlation between the so-called fear index and the market as a whole. when stocks go higher, the vix
11:16 pm
usually goes lower. when stocks go down, the vix tends to rise. all of this is pretty routine, right? however, when the correlation starts to break down, that's different. that's when the volatility index can be an incredibly important signal if you're willing to look at it. i mention this, because the standard correlation already seems to be breaking down right now, right before our eyes and that is not a good sign for the market. so tonight we're going off the charts with the help of mark sebastian with optionpit.com. writes to me on realmoney.com as well as being our resident vix expert here on "mad money." now, let's put this in context. thanks to sebastian's work, we've been able to spot a host of bottoms and tops, all of which were visible ahead of time, all because the visibility index wasn't behaving the way you would expect it. we've seen this over and over again this year. he's been uncannily right, and that's why i'm back talking to him again right now. but first, let's explain how this works. a little primer here. check out this chart of the s&p
11:17 pm
500 and the vix since the
11:18 pm
11:19 pm
11:20 pm
11:21 pm
11:22 pm
the charts, as interpreted by mark sebastian, say that this is the time to get cautious. he says you should take something off the table, because the vix is signaling that our troubles aren't over just because the politicians got their act together for the moment last week. if son-in-law because these politicians will be right back in the headlines three months from now, fighting over the same things, with some people, particularly tea party, totally emboldened to shut the government down, and it's going to start impacting the market once again. i'm not quite as pessimistic as sebastian, but we've seen this vix pattern play out accurately so many times, that i think it's very important to take what he's saying seriously and temper your and my enthusiasm. after the break, i'll try to save you some more money. coming up, search and destroy. google crossed over the $1,000 mark, but is this only the il mincut is this only the at ce. revolutionizing an industry can be a tough act to follow,
11:23 pm
but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business. [ male announcer ] staying warm and dry has never been our priority. our priority is, was and always will be serving you, the american people. so we improved priority mail flat rate to give you a more reliable way to ship. now with tracking up to eleven scans, specified delivery dates, and free insurance up to $50 all for the same low rate. [ woman ] we are the united states postal service. [ man ] we are the united states postal service. [ male announcer ] and our priority is you. go to usps.com® and try it today.
11:24 pm
[ male announcer ] once in a while, everything falls into perfect harmony. [ engine revs ] and you find yourself in exactly the right place at the right time. just be sure you're in the right car when it happens. the 2014 c-class sports sedan. power, performance and style in total alignment. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. help the gulf when we made recover and learn the gulf, bp from what happened so we could be a better, safer energy company. i can tell you - safety is at the heart of everything we do. we've added cutting-edge technology, like a new deepwater well cap and a state-of-the-art monitoring center, where experts watch over all drilling activity twenty-four-seven. and we're sharing what we've learned, so we can all produce energy more safely. our commitment has never been stronger.
11:25 pm
haslem eleia of how does a company go from being a despised loser to a beloved winner in just 12 months' time? that's the big question when it comes to this incredible move in google, propelling the stock over $1,000 recently. we know the proximate cause. on thursday after the close, google reported a truly spectacular quarter, and as a result the stock surged from $888 to $1,011. that is a 13.8 move in a single session. but you need to look back a full year if you want to understand what made these results truly remarkable. because at the exact same time in 2012, google was a dog, that total bow wow that was being written off, left for dead by wall street. and for a pretty good reason, too. october 17th, 2012, google
11:26 pm
reported a quarter that was wildly viewed as being absolutely hideous, causing the stock to drop from 755 to 695, almost an 8% decline in one session. >> boo! >> one year ago, google was virtually untouchable. i was one of the few people who said stick with the stock, and @jimcramer on twitter, i was roundly hounded even more than usual. so how did management turn things around? how the heck did google go from being poleaxed to go be widely praised in exactly 12 months? >> that was easy. >> buy buy buy. >> let's take a trip in the way back machine with mr. peabody so you can understand exactly what google has done and why the stock is even at these heights still worth buying. we're time traveling to a little more than a year ago, october 29th, 2012, a few days after google posted its particularly heinous third quarter. that's the day when bank of america and merrill downgraded
11:27 pm
goog in a very perceptive if ultimately incorrect piece of research titled mobile transition taking a toll, downgrade to neutral. that really captured the essence of what was wrong with google in the third quarter of 2012. that was the one that was in the middle of the day, they announced, it was supposed to come out at the end of the day, an exercise in embarrassment. at the time, google was taking it on the chin. google gets the vast majority of its revenue from selling ads and mobile ads are worth substantially less than advertisements that show up on the big screen or the desktop. the analysts at bank of america and merrill laid out google's mobile dilemma in very clear and stark turns. and in that downgrade, and it was a good, well-written piece, he said the opinion of the stock had fallen to two camps. there are the bulls, quote, those with a longer-term view that believe the company is well positioned in mobile and can build a hardware and software ecosystem that can drive significant value creation and rival apple. and then there's the more
11:28 pm
cautious camp, the one he cautious camp, the one he started belonging to, those that think the mobile advertising transition could be longer and create more advertising revenue and margin disruption than the street anticipates. that's what we always say on this show, okay, when you have margin disruption, when you have margin contraction, stocks go down. the piece painted a picture of two very distinct paths that google might end up traveling. if things go well, he acknowledged, and google built a staple of strong mobile assets, android, hardware, maps, search, chrome, all a big potential. but he worried that all of the growth from mobile could be canceled out by the shrinkage of the desktop business, which he said, and i quote, could result in a deterioration of revenue and margin trends in 2013, end quote. after the hideous quarter google just reported, this analyst felt the latter course was more likely and the deceleration of the pc side causing margins to get hammered was his biggest worry. he also called out a number of other issues, the controversial motorola mobility acquisition could be unpredictable, the losses there could continue, especially given the competition
11:29 pm
from apple, samsung, microsoft. meanwhile, regulatory agencies in both the u.s. and europe were investigating the company, and with decelerating growth, this bull turned bear didn't think the stock deserved to sell for much more than 16 times earnings, kind of what the average s&p stock sells at, even though this company is far from being average. i get where the guy was coming from. a year ago, google had just reported a quarter where its website revenue, the core business missed dramatically, but the company growing from an astounding rate to just 15%. the margins were being crushed. the cost-per-click, or cpc, a hugely important measure, it declined by 15% that quarter. and sure, things looked bleak for google. so how did the company turn things around to the point where this is now a $1,000 stock? as it turns out, the bank of america and merrill analyst wasn't the only one who saw two possible futures for google. a bullish one where they triumph
11:30 pm
in mobile and a bearish one where they can't offset the weakness from desktops and the mobiles collapse. you know who else figured it out? google's management. they recognized the same task. that's what you need to understand about great american companies. they always see the two paths they can go down and they figure out how they can get on the right one. and that's why google's a best of breed stock that i always talk about. it picked the correct highway. it googled back, saw no traffic, went for it! i don't want to give the bank of america guy a hard time here. that's wrong. that's not the takeaway. it didn't take them long to realize that google had the right stuff as he upgraded the stock to a buy on february 27th. i've known many analysts who dig in their heels for a lot longer than that, including some of these netflix folks, and he's been right ever since he got back on the google train. when you look at the quarter that google reported last thursday, it was clear that they have answered all of the worries from a year ago. it grew 21% year over year. that eliminates that objection.
11:31 pm
meanwhile, youtube-branded video ads grew at an incredible 75 pace, 40% of the traffic coming from mobile. up from just six two years ago. google was busy monetizing that traffic with those novel ad campaigns that are now succeeded. it eliminated that objection last year in the conference call. analysts were disappointed google couldn't give any specific answers about their mobile strategy. this year, google made it clear that they're the king of mobile, with accelerated ad buys of 26%, which suggests that as people access the web from many more screens, google has more ads. the company's android operating system is now the dominated system all over the globe. over a billion android devices have been activated worldwide, literally 1.5 million new ones every single day. there on all those android users are also using google search, google maps, google everything on their phones and tablets, creating a deluge of mobile ad revenue. in short, the bank of america and merrill analyst bullish scenario from last year, where the transition to mobile turns out to be more of an opportunity
11:32 pm
for google than a liability -- total reality. this year, google's paid clicks, the number of times people click on paid advertisement, they were up 26%. a little slower than a year ago, but the cost-per-click, how much the company makes per click only declined by 8%, dramatically better than the horrific decline they reported last year. in other words, the damage from people abandoning the desktop is being contained. those regulatory investigations people were so nervous about, they're over. no harm done. at the meanwhile, the loss in motorola mobility, i found them predictable, under control, and maybe reversing. i think the morgan stanley piece this week put it perfectly. it was the best idea's recommendation, right after google reported. what it said, google was a dominant, high-margin internet utility. what a great term, that has consistently been able to produce core revenue growth of 27% or more. but do you know this stock is trading at 19 times next year's earnings assessment? that's like kellogg, people. that's like general mills.
11:33 pm
do you think cereals has the growth this company has? it's very possible that those estimates for google could be too low. and when you back out google's $148 in net cash per share, the stock is trading at just 16.4 times next year's earnings. that's the same as an s&p stock that has half its growth. it's still absurdly cheap considering the consistent high growth that google is now delivering. here's your bottom line. when a young, smart company with lots of cash and a dominant franchise stumbles like google did a year ago, you shouldn't be so quick to abandon ship. google was at 695 when bank of america downgraded it over a year ago. over the next month, the stock did, indeed, drop another 50 points. but then it began its magnificent rebound. thanks to management's fabulous execution, google really hasn't looked back since. if you bought google in the sell-off a year ago, you got a 44% gain. even after this epic run, i still believe google is worth buying, right up here. in fact, i think it's too cheap to ignore. how about don in north carolina, please? donna?
11:34 pm
>> caller: hey, jim! love your show. >> thank you, donna. >> caller: here's my question. what's up with cypress semiconductor? a couple of months ago, you had them on your show. the outlook looked good, financials, not to mention the touch screen revolution, right? but the stock keeps lowering. so what's -- >> it's been a huge disappointment to me. and i've got to tell you, this is always my fault. it's not like the ceo hasn't delivered. i didn't deliver for you, the viewer. i believed, i thought there was a big turnaround going, t.j. rogers put a lot of his own money up. i thought it was the right level. i got it wrong. i believed, it's my fault, i'm surprised the stock's as low as it is, but they did disappoint this quarter. hope is not a strategy, i can tell you i hope it comes back, that's not rigorous. i'm just saying, i got it wrong. let's go to fozzy in colorado, please. >> caller: big boo-yah, jimmy,
11:35 pm
from fozzy in colorado. i want to talk about yahoo!. >> yahoo!? i see your dog and i raise you my dog. yahoo!, i think, is going to plateau here until the next bit of information about ali baba. so i'm going to tell you you have to watch our morning show, "squawk on the street," and listen to david faber. he knows the ali baba story better than anybody. i'm going to ask him and i will come back. yes. even at these levels, google is not done going higher. management pivoted. they found the road less taken, the profitable road. stay with cramer. this veterans day, "mad money" honors those who defend our country's freedoms, by helping defend their financial futures. if you or someone in your family is proudly serving or has served in america's armed forces, we
11:36 pm
invite you to join our live studio audience on november 8th for "mad money" invest in america, absolute to the troops. for tickets, go to madmoney.cnbc.com. [ horn honks ] [ passenger ] airport, please. what airline? united. [ indian accent ] which airline, sir? [ passenger ] united. whoa taxi! [ british accent ] what airline, then?
11:37 pm
[ passenger ] united. all right. [ spanish ] what airline? [ passenger ] united. ♪ [ mandarin ] which airline? [ passenger ] united. [ arabic ] which airline? [ passenger ] united. [ italian ] where are we going? [ passenger ] united. [ male announcer ] more destinations than any other airline. [ thai ] which airline do you fly? [ passenger ] united. [ male announcer ] that's great, big world friendly. ♪ customer erin swenson ordebut they didn't fit.line customer's not happy, i'm not happy. sales go down, i'm not happy. merch comes back, i'm not happy. use ups. they make returns easy. unhappy customer becomes happy customer. then, repeat customer. easy returns, i'm happy. repeat customers, i'm happy. sales go up, i'm happy. i ordered another pair. i'm happy. (both) i'm happy. i'm happy. happy. happy. happy. happy. happy happy. i love logistics.
11:38 pm
11:39 pm
it is time, it is time for the "lightning round" on cramer's "mad money." rapid-fire calls, buy or sell. i don't know the calls or questions ahead of time. when you hear this sound, the "lightning round" is over. are you ready, skee-daddy? time for the "lightning round" on cramer's "mad money." i want to start with brad in kansas. brad? >> caller: cramer! a big, big boo-yah from the little apple, manhattan, kansas. >> i love that. manhattan on the call. what's happening? >> caller: the stock i want to ask you about is disney, din. >> all-time high, i'm not backing away. i liked it at 63 last quarter. i got to tell you something, i think disney's a great, great story. let's go to bob in new york. bob? >> caller: hey, jim, a big boo-yah from me here in keene, new york, home of the high peaks and the adirondacks.
11:40 pm
>> well, i'm a 46er and many of them in winter. what's going on? >> caller: i'm even a bigger fan of yours. here's my big question. should i take the money that made facebook, which has doubled recently, and put it back into linn energy? >> that's an intersection question. we at actionalertsplus.com, we trimmed some of our facebook, because we added double. linn, still waiting, they did file a document. i'm waiting for the s.e.c. to bless things, and if they do, yes, it would be the right thing. but we can't move until the s.e.c. blesses. tracy in texas. tracy? >> caller: hey, jim, how are you, dear? >> caller: all right. how are you? >> caller: good. i wanted you to unstump for me on my confusion or the street's confusion of what i read in the transcript of the earnings of micron and why they were so unappreciative. >> this stock ran up in anticipation of the closing of the deal in japan, people said,
11:41 pm
i got to get off this horse. this is pure profit taking. i don't think it's a bad thing. i don't mind selling half if you bought it at the 8 to 10 level. i would take that profit on half. tom in illinois. tom? >> caller: big boo-yah from all the packer fans in illinois. >> well, you know, i got -- i have lacy, i think it's going to be a monster week. don't forget, you can run on the vikings. what's up? >> caller: okay. i bought -- started buying baxter at 62, what do you think? >> i want to own baxter. let's go to chalmers in new york. chalmers? >> caller: a boo-yah to you, jimmy! >> nice. what's up? >> caller: a quick shout-out to my family in cold spring harbor, i love you guys. >> love them too! >> caller: jim, thank you. this stock has my attention. laredo petroleum holdings. >> well, laredo is good. laredo is not unlike emerald that we saw today, not unlike eog. there are a lot of these companies that have just had
11:42 pm
great, great, great moves. be careful. oil itself is going down. i would sell a quarter of laredo and let the rest run. and that, ladies and gentlemen, is the conclusion of the "lightning round"! >> the "lightning round" is sponsored by td ameritrade. coming up, job number one? could the key to fixing america's unemployment picture be in our own backyard? the oil-rich bakken shale has helped bring north dakota's joblessness to half the national average and emerald oil has been drilling right in the heart of the play. the play. don't miss cramer's exclusive. on the trading floor g
11:43 pm
11:44 pm
11:45 pm
even with the price of oil falling under $100, i'm still a big believer in the independent domestic oil producers. we simply have so much newfound crude in this country, these companies will be able to deliver terrific growth for years, not months, not quarters, years to come. that's why by popular demand, i want to introduce you to emerald oil company, a tiny high-risk domestic oil name where the growth is downright phenomenal. this $8 and change a stock is not for the faint of heart. emerald mainly operates in the
11:46 pm
williston basin in montana, the dakotas, canada. the home of the bakken shale. we visited that, brian sullivan and our friends. they have nearly 60,000 acres containing 313 drilling sites. the company has two rigs running right now, but they plan to add a third next year. the key is that emerald expects to double its oil prediction from 2013 to 2014. while the company is not yet profitable, they expect to turn a profit starting next year. they have some holding in colorado's niobrara shale, as well as other less well-known plays in montana. let's dig deeper with the president and ceo of emerald oil to find out more about his company and where it is headed. welcome to "mad money." >> hey, jim. big bakken boo-yah. >> i'll take that. you know we were there. take a seat. it seems like every day, we discover there's a new one in williston. where have you guys been and where you going? >> we've got 65,900 acres in the core of the williston basin. 44,000 acres are in central mckenzie county where we have two rigs running right now.
11:47 pm
the balance of the acreage is in williams county, north dakota, and richland county, montana. >> so montana we've not even looked at at all. is montana as oil rich as north dakota, that portion? >> jim, it's actually highly prospective. we've seen a lot of wells drilled over the course of the last couple months and have been following the results of a lot of different operators in that area. we're going to add a third rig next year. >> here's what's amazing to me about this whole thing. how where we are three, four years ago. is this old technology that we didn't know was there. has core labs discovered, wow, montana's better than we thought? >> we think core labs is a great company. we've been one of the technology pioneers in central mckenzie county. we've been using geosearing on all of our wells to stay within a 10-foot tolerance on the laterals. we've been using slick water fracs with high concentrations of ceramic in each of the individual stages.
11:48 pm
and i think that's contributing to the very well good results we've seen in mckenzie county today. >> what do you do when the oil comes out? do you have infrastructure? >> funny that you ask that. we have been trucking the oil out. >> okay. i knew someone was still trucking. >> but we just recently signed a deal to have an oil pipeline installed, which a large utility is going to put the capital in and it will reduce our transportation costs by more than $1 and it will be online by the beginning of the first quarter of 2014. >> so you've sold enough assets to be able to make it so you don't need to come to the markets, so you're fine for all of next year. >> we just completed capital raised for $140 million. and our private equity sponsor added another $30 million. so we have in excess of $200 million of cash on the balance sheet, and no debt right now. so we're more than fully funded to drill to our plan for 2014. >> well, should you go flat-out here and add some more rigs? >> we think a third rig is the right step in april of next year and the next logical step after that is to put a fourth rig on in the fourth quarter of next year?
11:49 pm
>> how about niobrara. >> we're focusing all of our capital to the williston basin. >> while i like niobrara, i know it's hit or miss, where it seems like williston is 100% hit. how are you finding workers and how much do you have to pay them? and is this one of the situations where our viewers could say, you know what, i'm down and out on my luck. i'm going to get to emerald oil and i'm going to get a job. >> we're actively hiring in the williston basin. >> you are? >> yeah. please give us a call. it's finding skilled, experienced workers has been a challenge for everyone in the williston, but we've been able to navigate it today. >> where are we in this country? a few years ago, north dakota was the fifth largest oil producer, then fourth, then the third. now, obviously, eagle ford and permian have come back. texas is going to be big. but is williston even bigger than we thought? >> jim, the aerial extent of the williston just continues to grow. >> it does. >> the usgs had a 7.4 billion
11:50 pm
barrel average estimate on it. i think you're going to see that average continue to move up. >> what do you think about what we're going to do for the year there? >> our year-end guidance is average 2,300 b.o.e. a day and next year averaged at 3,300 b.o.e. a day. >> that's a good little -- >> we'll be giving guidance on our upcoming quarterly call. >> i'm glad someone called about you. we're looking -- look, cog already moved up a lot. and you know, whiting moved up. it's just -- there's not a lot of guys left who are still in your market capitalization stretch. >> and jim, i would highlight that our valuation is still very low compared to all of the williston. >> absolutely true. so mcandrew, listen, it's still cheap, it really is. stay with cramer. thank you. >> thank you, cramer. it's a growing trend in business:
11:51 pm
do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind.
11:52 pm
11:53 pm
don't you dare blame reid hastings, ceo of netflix, for losing you money if you bought the highest flying stock of all, netflix. this morning it was up huge before the hideous intraday reversal. i have never, ever heard a ceo give a more brightline admonition than hastings when he reported this one. his most important line in the whole release, in calendar year 2003, we were the highest performing stock on the nasdaq. we had solid results compounded by momentum investor-fueled
11:54 pm
euphoria. some of the euphoria today feels like 2003, end quote. he might as well have said, sell, sell, sell. there's talk that this downbeat projection may be be the prelude to an equity offering. that might make sense. but who doesn't need the money? there is, however, something unprecedented here. executives always want you to buy their stocks. they think it's a great time to buy. but one of the best in the business doesn't. i think this is a note which says, quote, we aren't trading on fundamentals. we are trading on heart, on culture, and of course, on momentum, end quote. this pre-market netflix rally, which reversed and reversed hard today, is exactly what happens when you've got a stock that goes automatically higher because certain benchmarks are hit that aren't earnings benchmarks. think about how we value netflix. earnings per share? by revenues, absolutely not. it's by subscriber growth. the decision, therefore, is binary. better than expected subscriber growth, buy. slower than expected, sell. they have to do that. if it's short, they have to
11:55 pm
cover because the only thing they're really betting on is that fewer people signed up and as the stock goes higher either through new content like "orange is the new black" or "house of cards," the analysts have to take their price targets up, because they use these price targets that are so important. it's an eerie virtuous circle based on price targeting. as they introduce sequels, people have to catch up by watching netflix. now remember, netflix is one of my anointed ones from earlier this year, a stock that can't be contained by the four walls of the analyst canvas. it's like amazon, solar city, and tesla. can you believe elon musk owns two of those? we know netflix has expansion plans that need to be funded as well as continual demands to order new content and to pay for exclusives. we know that international is not easy. on the call, if you can call it that, the company even admitted that it was gamed by brazilians playing signup games. but we know that after this quarter, netflix is, indeed, the worldwide gold standard for home
11:56 pm
entertainment. and at $20 billion in market capitalization that's still, sorry, reid, cheap versus the scale of the opportunity and the ability to shape more favorable deals down the road. yes, reid's right, it does feel like 2003. yes, this has become the ultimate caveat emptor stock. even carl icahn sold about half of his holdings. but yes, because of the way momentum investors evaluate stocks, netflix is good until it's bad. it soars until it crashes. remember, there are always a couple of stocks like this in the stock market at any given time. this one has lasted longer than most. i have said that netflix should be bought by apple. that was when the company had market cap of $12 billion. now that it's almost doubled from there, we know you're buying it for the idea that the company might be acquired. you're buying it for one reason and one reason only. someone else will buy it at an even higher price than you, you hope. as long as you can remember that rationale, as flip as it might be, you'll be just fine. when we made our commitment to the gulf, bp had two big goals:
11:57 pm
help the gulf recover and learn from what happened so we could be a better, safer energy company. i can tell you - safety is at the heart of everything we do. we've added cutting-edge technology, like a new deepwater well cap and a state-of-the-art monitoring center, where experts watch over all drilling activity twenty-four-seven. and we're sharing what we've learned, so we can all produce energy more safely. our commitment has never been stronger. diarrhea, gas, bloating? constipation, yes!
11:58 pm
one phillips' colon health probiotic cap each day helps defend against these digestive issues... with three strains of good bacteria. [ phillips' lady ] live the regular life. phillips'. ♪
11:59 pm
♪ ♪ transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business.
12:00 am
panera, as predicted, not that strong. they will get a reset, we can go back to panera. carl icahn sells a big stake in netflix. stock goes lower. there's always a bull market somewhere and i try to find it right here for you on "mad money." i'm jim cramer and i will see you tomorrow! is he on crack? >> the guy that wants to sell it has some issues with the wife. she found out about it. she didn't know what was going on with it. >> we head to los angeles on a car-buying frenzy. >> we're super close. >> how close are we? >> will the city of dreams be a boom... oh, my goodness, look at that. or a bust? $4,000. >> you think i just got off the last banana boat? >> and later... >> i'm gonna at least go look at some properties. >> the gang and i have to make a decision... oh, look at this. that could change the future of flat 12... >> here's the main warehouse area. >> i dig this. forever. we're toying with the idea of doing something in l.a. >> what are you talking about? >> my name is jeff allen. i buy, fix, anfl

63 Views

info Stream Only

Uploaded by TV Archive on